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Rio Tinto takes control of Ivanhoe, strengthens hold on Oyu Tolgoi

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By Alex MacDonald

RIO Tinto last night said that it has taken majority control of Ivanhoe Mines, a move that would theoretically allow it to take indirect majority control of Mongolia’s massive Oyu Tolgoi copper-and-gold project.

By increasing its stake in Ivanhoe, Rio Tinto now has the ability to change Ivanhoe’s board composition, a person familiar with the matter said. It will be able to increase its number of appointed board members, currently seven out of 14, which would allow it to assume indirect majority control of Oyu Tolgoi.

Rio Tinto is project manager of Oyu Tolgoi, which is 66 per cent owned by Ivanhoe Mines and 34 per cent owned by the Mongolian government.

Rio said that it has no current intention to further increase its stake in Ivanhoe, but said it reserves the right to do so.

“Rio Tinto’s move to a majority stake in Ivanhoe further demonstrates our commitment to the safe and successful development of the Oyu Tolgoi mine for the benefit of all stakeholders,” said Andre Harding, Rio Tinto’s copper chief executive.

Mr Harding reaffirmed that the project is due to begin ore production in the second half of 2012 and will start commercial production of copper concentrate in the first half of 2013. The project is slated to become one of the world’s largest copper producing deposits.

Rio Tinto paid $US302 million to increase its stake in Ivanhoe, by purchasing an additional 15.1 million Ivanhoe common shares from two sellers in a privately negotiated purchase at C$20.00 ($18.89) a share.

Ivanhoe’s shares were down 0.1 per cent at C$US18.19 following the news. As of 4.27pm GMT Rio Tinto’s shares were down 1 per cent at ₤36.97 ($55.03) each.